In a daring move reminiscent of a modern-day financial thriller, Genesis Global Capital LLC has launched an audacious legal battle in New York’s bankruptcy court. The cryptocurrency lending giant is chasing a staggering sum of $689 million, claiming it was wrongfully distributed by its erstwhile partner, Gemini Trust Co. LLC, in the ominous shadow of bankruptcy.
Genesis vs. Gemini: A Tussle Over Millions
The scene unfolds with Genesis accusing Gemini of knowingly participating in the transfer of funds while Genesis was on the brink of insolvency. The massive sum, amounting to over half a billion dollars, was allegedly moved in the crucial months leading up to Genesis’ declaration of bankruptcy in January.
Genesis Seeks $689M Clawback : The Genesis of the Dispute
Genesis Global Holdco LLC, along with its affiliates, spiraled into financial turmoil, filing for Chapter 11 with a debt burden of $5.1 billion. This downfall, they claim, was exacerbated by the digital asset industry’s instability. The company, once a linchpin in lending and borrowing digital assets, pointed to a ‘run on the bank’ scenario, with Gemini’s actions significantly contributing to this financial frenzy.
Gemini Earn: A Partnership Turned Sour
The partnership between Genesis and Gemini was embodied in Gemini Earn, a program facilitating digital asset loans. Here, users of Gemini, a digital asset platform, could lend their assets through Genesis, reaping fees in return. This arrangement hit a snag when Genesis listed over 400 withdrawals by Gemini, totaling the monumental $689 million, as potentially retractable in the bankruptcy estate.
Genesis Seeks $689M Clawback : Counterclaims and Collateral Disputes
Genesis’ aggressive legal stance includes a request to block any claims by Gemini or its users under the Chapter 11 proceedings until the disputed sum is returned. This move comes in response to Gemini’s accusation in a separate lawsuit that Genesis held onto $1.6 billion in collateral promised to Gemini Earn users.
Genesis Counters Gemini’s Allegations
In a sharp retort, Genesis has branded Gemini’s counterclaims as desperate attempts to sidestep their contractual obligations. Gemini, on the other hand, has staunchly defended its actions, deeming them routine business operations and protected under bankruptcy’s safe harbor provisions for clawbacks.
Genesis Seeks $689M Clawback : A Tangled Web of Litigation
The legal entanglement doesn’t end there. Both companies face scrutiny under multiple lawsuits, including allegations of selling unregistered securities and misleading users about the investment program. The New York Attorney General’s office has also stepped into the fray, filing fraud charges against both parties.
Representing the Crypto Titans
In this high-stakes legal drama, Genesis is represented by the formidable team of Cleary Gottlieb Steen & Hamilton LLP, while Hughes Hubbard & Reed LLP stands in Gemini’s corner.